The feds are wrong. Lots of wellness programs violate the ADA.

This is a TIE-U post associated with Nick Bagley’s Health Reform and Its Legal Controversies (Michigan Law 866, Fall 2015). For related posts, see the course intro.

Workplace wellness programs discriminate. That’s what they do. Employees who adhere to a wellness program pay less for their coverage; those who don’t pay more. Wellness programs thus clash with federal rules that generally require employers to treat their employees even-handedly, regardless of health status.

The Affordable Care Act makes an exception, however, for wellness-based discrimination. Never mind that wellness programs hurt lower-paid employees and don’t seem to work. Under the ACA, employers can threaten employees with penalties of up to 30% of the cost of their premiums if they don’t achieve health-related benchmarks. Programs this aggressive aren’t yet the norm, but they’re not unheard of.

At the same time, the Americans with Disabilities Act is still on the books. The ADA says that employers can’t conduct medical examinations, including medical histories, unless they’re “voluntary.” Yet most wellness programs ask employees to undergo intrusive and detailed health assessments.

That presents a conundrum. Is a health assessment still voluntary if an employee faces a substantial financial penalty for refusing to undergo it? In a recent proposed rule, the Equal Employment Opportunity Commission said it was. Wellness programs, in the EEOC’s judgment, do not violate the ADA so long as the programs adhere to the ACA.

The EEOC’s position hinges on the view that its job is “to provide as much consistency as possible” between the ADA and the ACA. In this, the EEOC could have in mind two different legal arguments. Neither is compelling.

First, the EEOC might think that the ACA implicitly created a safe harbor from the ADA for practices that the ACA explicitly authorizes. The intuition is that Congress wouldn’t have told employers that they could establish wellness programs if most of those programs would violate the ADA. Instead, Congress should be taken to have narrowed the scope of the ADA when it comes to asking about medical histories.

This argument doesn’t fly. A well-established rule of interpretation holds that Congress cannot be understood to repeal its prior handiwork by implication. The rule exists for good reason. Courts and agencies can’t repeal laws; only Congress can do that. By the same token, courts and agencies can’t ignore a duly enacted law just because they suspect a later Congress would have preferred to do away with it.

And who knows what Congress’s attitude was toward the ADA? It may not have occurred to Congress that wellness programs might raise concerns about disability discrimination. Had it considered the matter, it’s not at all clear how Congress would have resolved the tension between the ACA and the ADA. Until Congress clarifies matters, the safest approach is to say that the ACA authorizes wellness programs only to the extent that they don’t violate the ADA.

It’s not like there’s an irreconcilable conflict between the statutes. Wellness programs that discourage smoking, for example, won’t even arguably run afoul of the ADA. Similarly, wellness programs that don’t require health assessments should mostly be OK. And even if lots of wellness programs can never get off the ground, so be it. It’s up to Congress to fix it—not the EEOC.

Second, the EEOC might believe that, because the word “voluntary” can be interpreted more or less restrictively, it’s appropriate for the agency to select the interpretation that fits best with other statutes, including the ACA. In principle, this is totally reasonable. If at all possible, statutes enacted at different times should be interpreted to play nicely with one another. To put it in the language of administrative law, agencies can properly take into account later-enacted statutes at the second step of Chevron.

But the EEOC’s argument only works if the word “voluntary” is amenable to the construction that the agency has placed on it. If it isn’t, the EEOC can’t adopt that interpretation, even if doing so would harmonize the ADA with the ACA. In administrative law terms, such an interpretation would flunk Chevron’s first step.

The question thus boils down to whether the EEOC can reasonably say that a health assessment is still “voluntary” if there’s a substantial financial penalty for refusing to take it. Notice that the ACA has no bearing on that inquiry. It’s purely a question of the meaning of the ADA.

And here’s where the EEOC’s argument falls apart. The average premium for a family plan in 2015 is $17,545; 30% of that is $5,263. Under the EEOC rule, then, an employer can dock an employee with a family more than $5,000 if she doesn’t take a health assessment. With that kind of financial inducement, it’s nuts to say that the assessment is voluntary. Sure, the employee could always turn down the $5,000. But no reasonable person would. The health assessment is mandatory in every meaningful sense of the word.

As such, I don’t see how the EEOC rule can be squared with the ADA. Unless I’m missing something—always possible—I think there’s a good case that the agency’s proposed rule is unlawful. Let’s hope the EEOC rethinks it.

@nicholas_bagley

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